Germany Close To Winning Fight To Keep State Control Over Volkswagen

More than 500,000 Volkswagen and Audi cars are being recalled after the EPA discovered the German automaker had installed software to beat environmental testing standards. Photo: Reuters

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Germany appeared to have won a fight with the European Commission to keep some longstanding state control over automaker Volkswagen AG (Otcmkts:VLKAY) on Wednesday, after an adviser to the European Union’s highest court may have thwarted an attempt to overturn Lower Saxony’s “VW law.”

A final ruling isn't expected until later this year, but a preliminary advisory decision rejected the bid to throw out the 1960 law that gives Lower Saxony, which holds a 20 percent voting stake in the company, a veto over critical decisions, such as mergers and acquisitions, Reuters reported Wednesday.

In 2011, the commission in Brussels sued Berlin in the European Court of Justice for the second time, demanding that the VW Law be repealed.

But the court’s advocate general, Nils Wahl, said in a written opinion that the judges should dismiss the claim that Germany should pay a fine for failing to repeal Lower Saxony's veto power following a 2007 decision by the court.

Wahl said Germany complied with the six-year-old ruling by eliminating the voting cap and Lower Saxony’s right to directly appoint two delegates to the company’s board.

“The advocate general further points out that the purpose of the present proceedings is not to determine whether the provision on the blocking minority, considered on its own, infringes EU law,” the court said in a statement, “but only whether Germany has complied with the 2007 judgment.”